First a Cease-and-Desist Letter; Now a Lawsuit
The new filing comes just a few months after the Connecticut Department of Consumer Protection issued a cease-and-desist letter to VGW. The letter was sent in February, and VGW waited several months before pulling services from Connecticut in the fall.
The lawsuit claims that VGW is a video game development business that operates ‘social casinos.’ In reality, the lawsuit says that the company offers virtual internet gambling casinos that market online gambling games.
The business is reportedly in violation of Connecticut law, which prohibits the promotion of a simulated gambling device via sweepstakes. The attorneys also argue that VGW has exhibited fraudulent behavior by advertising its services as legitimate operations when the lawsuit says they are not.
The lawsuit showcases information from VGW’s financial records that supports the claim. The information reveals hundreds of millions spent on advertising. For the 12 months ending June 30, 2024, the company reportedly spent $418 million on marketing and advertising fees, an increase of almost $69 million from the previous year.
Continued Pressure on VGW
The recent legal action in Connecticut is just one of several lawsuits VGW is currently facing. The company is being pressured to defend its services from every corner of the country as critics continue to call the social casino sites offered ‘illegal gambling.’
VGW has tried to move state challenges to the federal level, where civil litigants will face more procedural issues in the cases, but has seen little success. States that offer real-money online casino gaming are the ones sending cease-and-desist letters in an attempt to see the brands leave the jurisdictions.
Sweepstakes gaming is a potential threat to the real-money sector as games are free to play, and no purchase is necessary to get started. With real-money sites, players must deposit funds to play, and sweepstakes brands provide free Gold and Sweeps Coins for instant gaming.
Players in jurisdictions where real-money gaming is legal may switch to the sweepstakes model for similar games without the need for investment, which seems to be the real-money casino industry’s fear.
So far, VGW has exited a handful of markets due to the cease-and-desist letters. The Chumba Casino brand is no longer operational in Connecticut, Idaho, Michigan, Montana, and Washington. If additional areas decide to follow suit and send out similar letters, we may see more states added to the list in the future.
